Yuan to continue to appreciate: economists
By Linger Liu, The China PostThe Chinese yuan is forecast to continue its appreciation against the U.S. dollar according to currency forecasts from the Financial Times and Standard Chartered Bank given at the Taiwan economic summit forum in Taipei, yesterday.
March 15, 2013, 12:49 am TWN
Jaspal Bindra, Standard Chartered Bank group executive Asia director, said the Chinese yuan will serve as an attractive financial solution given the number of tourists and business interactions across the Taiwan Strait.
He said the yuan market in China needs to be internalized so to allow enough counter parties to trade in the currency to generate increased business. In terms of the regional economy, the Chinese yuan is forecast to grow, said Bindra. From the banking sector's perspective, apart from the 2-percent interest offered for savings deposits, it expects to provide more access to the yuan, according to the director.
RMB Boosts Economic Growth
Richard Watanabe, a partner at PricewaterhouseCoopers (PWC) Taiwan, said corporations aim to accumulate sufficient capital in Taiwan. He said that the financial service industry's contribution to the GDP is relatively high compared to other industries.
The Chinese yuan functions as a foreign currency in Taiwan, and the nation should take it as an option to increase and transport profits, said Watanable. The value of the Chinese yuan is forecast to appreciate against the dollar, which is different from in the past when most investors found it hard to access renminbi (RMB) assets.
Watanabe said Chinese yuan investments are considered an excellent way to allocate individual investor's assets. He said financial instruments such as the mini Formosa Bond and insurance policies linked to RMB products may be a good investment option, but it depends on how fast the RMB appreciates, said Watanabe.
The nation serves as the 13th largest nation in terms of investment in the insurance industry worldwide, said Watanabe. He said insurance assets in the private banking sector provide a variety of products for potential RMB investment.
Dim Sum Bonds, Formosa Bonds, RMB management and global wealth management have the potential to be the future investment trend, according to Watanabe.
Leslie Koo, chairman of Taiwan Cement Corp., said many financial futures such as hedge funds were traded through dollar conversion, which contains higher foreign exchange risks. The chairman said currency exchange risks in the U.S. dollar and RMB can drag down capital that would otherwise be placed into hedge funds. Putting more capital directly into RMB will eliminate the high currency exchange risk, said Koo.
Politics in RMB
Minister without Portfolio Chi Schive (薛琦) said to promote the nation by working as a contributor to Asia-Pacific integration, the Chinese yuan may be the best vehicle to generate more cross-strait business. The minister said more financial service channels are opening up to the capital market as well as the regional economy.
When asked by The China Post if the increasing amount of RMB flowing into the nation — coupled with China's relatively closed market and the absence of the New Taiwan dollar in the mainland — could be a sign of pre-political unification, the minister said there are channels opening in the capital market as well as the regional economy, and he remains optimistic about increasing tourism and business interactions across the Taiwan Strait in terms of economics and politics. The minister said he would be delighted to see tightened economic and political relations growing between the two parties in the future.